Letter of comfort guarantees West Lothian Leisure Trust funding
Council bosses have agreed to guarantee financial backing for the local authority’s arms’ length leisure trust West Lothian Leisure (WLL) as it battles back to strength from pandemic closure.
The council’s executive agreed a letter of comfort to auditors Azure to guarantee that the trust will remain in credit at all times.
Officers rejected a suggestion by SNP depute leader Robert De Bold that the council was providing a “blank cheque” to the trust, which maintains sports and leisure facilities, which were once under direct management of West Lothian Council.
The executive agreed 2022 to 2023 core revenue funding of £1.8 million for WLL earlier this year.
In addition, the council approved the 2022 to 2023 Revenue Budget, which includes an additional £1.5m to help WLL cope with the continuing impact resulting from Covid-19.
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In a report to the committee, director of finance Donald Forrest said: “WLL’s performance remains uncertain particularly as a result of the impact of the cost of living crisis and increased gas and electricity prices, leading to a potential reduction in revenue, as levels of disposable income fall, alongside significantly increased costs. WLL is in the process of re-assessing its 2022 to 2023 budget based on the first quarter of 2022 to 2023 performance but this is not currently available.”
It added: “Given WLL’s current financial position, WLL advised the council during June 2022 that Azure, WLL external auditors, asked that a ‘letter of comfort’ similar to that given by the council in relation to the 2020 to 2021 audit process be provided by the council to WLL in relation to the 2021 2022 audit process with this letter stating that ‘the council will undertake cash flow management with WLL to allow them to remain in credit at all times, thus allowing them to proceed as a going concern and meet their everyday cash liabilities’ over the financial year following the signing of the accounts.”
Councillor De Bold asked: “Is this a blank cheque to West Lothian Leisure to remain in credit at all times?”
Mr Forrest said the decisions on funding had been made earlier in the year and there would be no circumstances where the council was required to provided additional funding.
He added: “I would stress that this letter of comfort covers the financial year 2022 to 2023. I would certainly not recommend the council providing such a letter on an ongoing basis. It is only for the current financial year.”